Clarke reveals concessions over top-up fees

The Government made a series of concessions to Labour rebels over top-up fees today but vowed to press ahead with plans to allow universities to charge up to £3,000 a year.

The Education Secretary Charles Clarke told the Commons that the £1,000 student grant he is re-introducing this year will go up to £1,500 for the poorest undergraduates from 2006, when the new fees will kick in.

He pledged to write off outstanding loans after 25 years for low-paid graduates and promised to review the impact of variable fees - opposed by dozens of Labour backbenchers - after three years.

Universities will be required to offer bursaries to the poorest students, he said.

This was intended to mean that, with a combination of grants, fee remittance and that extra cash, "no student from a poor background will be worse off as a result of our proposals, whichever university they attend and whatever the fee charge for the course".

He promised to look at whether the Government could afford to increase the grant further for the most cash-strapped students by adding to it the proposed write-off of the first £1,125 of the fee.

He also said the Government wanted, over time, to end the means-testing of student loans, although it could not afford to do so at the moment.

The Government would in any case increase their maximum worth to the level of average living costs, he added.

And he promised that both Houses of Parliament would be entitled to vote on whether the cap should be lifted after 2011, another concession to opponents who fear elite universities want fees to be fully deregulated, as they for the Ivy League universities in America.

Despite the concessions, Mr Clarke indicated he expected a sizeable revolt against the plans but warned rebels they risked preventing working class students getting the grants if they voted the Higher Education Bill down.

"This is a coherent package to be taken as a whole - or not at all. If not supported by this House, none of the benefits will arise. It is not a pick and mix menu."

Mr Clarke told MPs that the poorest 30% of students would be guaranteed at least £3,000 a year from 2006.

That would come from a combination of the £1,500 grant, the £1,200 fee remission and a bursary from their university to make up the shortfall.

Many universities were likely to react angrily to the news that they will be forced to make up the shortfall via bursaries instead of this being left to their discretion.

But Mr Clarke said no university, even former polytechnics that take a lot of working class students, should have to shell out more than 10% of its fee income on bursaries.

He also confirmed his intention, first announced in a White Paper last January, to raise the threshold at which loans for both fees and living costs have to be paid back from £10,000 to £15,000 a year.

The elite Russell Group of Britain's 19 top universities were likely to react with dismay to the concessions.

Earlier, they warned that little cash would be left for spending on improved facilities.

On the opposite front, Mr Clarke and Prime Minister Tony Blair will know that their concessions will not satisfy hardcore opponents of variable top–up fees in their own party.

But Mr Clarke declared: "Variability remains key. We do not agree that a substantially higher fixed fee would be the way to raise additional resources.

"It would be deeply damaging. We would be denying universities the freedom to incentivise industrial, vocational, scientific, technical, engineering and sandwich courses, or foundation degrees, which are vital for the economic future of this country."

The National Union of Students branded top–up fees a "disaster" for higher education.

NUS national president Mandy Telford said: "The new plans for variable top–up fees will create a market in higher education. Students from poorer backgrounds will be put off going to more expensive courses."

Shadow health and education secretary Tim Yeo made clear the Tories would oppose the legislation, despite recent signals that his party may be preparing to change its policy of scrapping fees and funding universities better by capping student numbers.

He told Mr Clarke that the Government's policy was in "clear breach" of its 2001 manifesto commitment not to allow universities to charge top–up fees.

The proposals were "bad for students, bad for universities and bad for taxpayers", Mr Yeo told the Commons.